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Advantage: Automation Materials management information systems can reduce costs and improve quality. BY JON PRUITT

As an ASC administrator, what’s keeping you up at night? My guess is plenty. With the realities of health care reform quick-

ly changing the face of America’s health care delivery system, ASCs are not im- mune to demands for reducing costs and improving quality. How have you positioned your organization to meet these challenges and thrive in the new environment?

Health care providers are coming under increasing pressure due to sev- eral influences: ■

The acceleration of bundled pay- ment models that reduce costs of care, while at the same time increas- ing the risk shouldered by providers;

The shifting focus from isolated in- cidents of care to expansive episodes of care requiring more sophisticated approaches to managing cost and quality; and

The continuing downward spiral of profits thanks to dwindling reim- bursements from most payer sources. Add it all up and many ASC ex-

ecutives are evaluating their materials management function for opportuni- ties to cut costs, improve productiv- ity and maximize value. At the same time, many ASCs don’t include a full-time supply chain professional on their payroll. So, how do you start to tackle your supply chain challenges? First and foremost, look for ways to reduce supply costs. Even though resources are limited, dedicate time and money to your supply chain func- tion. Hire an experienced supply chain professional, someone who knows how to get the most out of your sup- ply spending and leverage contract- ing, aggregation and standardization


opportunities to benefit your bottom line with hard dollar savings.

Tips for Reducing Supply Costs Partner with a group purchasing organization (GPO). All GPOs are not created equal, so a careful evalua- tion and selection process will let you find the best fit for your needs. Look for a GPO partner with solid contract terms and pricing covering your high cost or high usage products. Evaluate the GPO’s expertise and track record in terms of strategic sourcing and realized savings. Aligning with the GPO should be free of charge. What type of support does the GPO pro- vide? What contracts does the GPO offer outside of medical supplies? There are great savings opportunities in services, pharmaceuticals and capi- tal equipment contracts. Be sure your GPO can help you in these areas too. When you have found the right part- ner, work closely with your represen- tative. Share your cost reduction goals and strategic direction to get the most benefit from the relationship. Make strategic distribution deci-

sions. Will your ASC align with one primary distributor or will you decide to do business with several distribu- tors? Will your operations utilize a just-in-time inventory system or will you carry inventory on site? How in- tegrated do you want your organiza- tion to be with your distributor? Standardize supplies. The more

you can reduce the variety of items you purchase, the greater the opportunity for your organization to realize sig- nificant cost savings. Standardization works across all categories of spend- ing: commodities, physician prefer- ence items, pharmaceuticals and more.


Create a supply formulary and stick to it. Formularies are usually associated with a payer’s pharmaceu- tical program, but the concept is cer- tainly applicable to your ASC’s mate- rials management program. Identify the most commonly purchased items, including those requested and used by physicians, and build a supply formulary. Adhering to the formu- lary should provide cost savings that will flow directly to your ASC’s bot- tom line. Negotiate contracts with suppli-

ers that best meet your financial and business needs. Often, local sup- pliers can provide best pricing, more immediate product availability and good will in the business community. National suppliers, on the other hand, might provide better pricing, greater product selection and local delivery options. By agreeing to commit your purchases to a particular supplier, you might be able to improve upon stan- dard GPO contract pricing and terms. Focus on managing costly physi-

cian preference items. A significant portion of your supply spending is de- voted to high-dollar physician prefer- ence items such as implantables like defibrillators, stents, joint prostheses and more. Your GPO partner should be able to help you analyze your cur- rent spending by physician and by procedure and to benchmark that in- formation against industry and com- petitor standards. Armed with this ob- jective data, you can begin the tough conversations with your physicians about product selection and utiliza- tion that you need to have. Monitor and measure your prog-

ress against savings and productivity goals. Establish benchmarks, validate cost targets and constantly monitor your progress toward successfully achieving your targets.

The advice and opinions expressed in this article are those of the author and do not represent official Ambulatory Surgery Center Association policy or opinion.

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